Business

Guide to Proper Physical Products & Services Distribution Tasks

 Producers/manufacturers must decide on the best way to store, handle and move their products and services so they can be available to customers at the right time and place. Producers typically need to employ the services of physical firms – warehouses and transportation companies – to assist in this task. 

Armstrong and Kotler (1994) observed that physical distribution involves planning, implementing, and controlling the physical flow of materials and final goods, from points of origin to use, to meet customer requirements at a profit.

Physical distribution aims to manage supply chains and value-added flows from suppliers to final users, as shown below

Several tasks should be part of the physical distribution of products. These are:

Read Also: Channels of Distribution and Types of Marketing Channels

Location of Manufacturing Facilities

There are two interrelated issues. Firstly, where to locate the manufacturing facility, and how many facilities to set up. 

The basic decisional parameters would be the availability of raw materials and the place of the market.

It may decide to locate the manufacturing facility nearer to the source of supply and ship the finished outputs to the outlying sales points or to erect the production facility near the geographical market to be served and arrange the shipment of the inputs. 

The location of NNPC for instance, in Port Harcourt, was on availability of raw material (crude oil) yonder. The primary consideration involved is the relative costs of transporting inputs and outputs, including the economics of different modes of transportation used to transport raw materials and finished products.

Location of Warehouses

One crucial consideration in this context is the nature of the products sold. However, if the product is a household item, such as tea, soap, or toothpaste, the retail outlets will be at the bottom of the distribution channel. 

Manufacturers of capital equipment, on the other hand, can have only one centralized warehouse for the main product but has to maintain several service centers to stock spare parts.

Read Also: The Different Classification of Products

Mode and Method of Transportation

There are several major decisional points in this context which for long were considered the heart of distribution management.

These are:

  • Which mode of transportation would be optimal?
  • Which method of distribution would be optimal?

Inventory Decisions

Inventory holding costs are increasing due to all-around increases in prices as well as the cost of capital. As a result, attention has to be attributed to how much inventory should be maintained, of what items, and where. 

Many of these decisions must be taken, keeping view of the broader corporate objective of service reliability. That is the capacity of the firm to deliver on time.

Using External Distribution Agencies

However, a firm may decide that because of resource constraints or lack of in-house expertise, it would like to concentrate on production and leave the task of distribution to an outside agency such as Independent Marketers in Nigeria. 

Contracting out disbursement is a crucial decision and would require an in-depth analysis of the relative costs and benefits, both tangible and intangible, of the alternative courses of action.

In conclusion, distribution is the all-important link between a manufacturer and his customers. It is concerned with designing a distribution strategy to facilitate the smooth physical flow of products from the manufacturers to where the customers can buy them. 

Channels of distribution refer to the alternative paths through which goods pass to buyers. Selling directly or indirectly, through intermediaries such as wholesalers and retailers are the two alternative methods of distribution selection. 

The final choice will depend on the type of product you are dealing with, the number and location of customers, buying habits, and the costs involved. The manufacturers should also consider some advantages of each type of intermediary before taking a final decision.

Read Also: The Importance of Channels of Distribution and Selecting an Appropriate Channel

Leave a Reply

Your email address will not be published. Required fields are marked *

error

Enjoy this post? Please spread the word :)